Archive for July, 2012

Where have all the good jobs gone?
Long time passing.

Capitalism in the United States is clearly failing to provide good jobs for American workers. First, it’s failing to provide jobs, since the official unemployment rate has been above 8 percent for 40 months now (and the U6 unemployment rate has been above 14 percent for even longer: 42 months).

And when people are managing to find a job, the percentage of good jobs has fallen from 27.4 percent in 1979 to 24.6 percent today.

The Center for Economic and Policy Research defines “good jobs” in terms of three criteria: a job that pays at least $18.50 per hour (in constant 2010 dollars), offers health insurance that is at least partly paid by the employer, and provides some kind of retirement plan.

What they find is that, over the last three decades, the share of good jobs in the economy fell 2.8 percentage points, despite a substantial increase in the quality of the workforce and a 63 percent increase in Gross Domestic Product per person.

Now, there are lots of different ways of defining good jobs. We might, for example, define a good job in terms of workers who have the possibility to collectively decide how much surplus they will produce and what should be done with that surplus. In that case, the percentage of good jobs in the U.S. economy falls to a tiny percentage. But even in terms of the current economy’s own rules—that, with more education, more years of experience, and higher productivity, workers will be rewarded with jobs that fit the CEPR’s definition—it is failing miserably.

To finish the song, when will we ever learn?

Special mention

Poverty and inequality are often treated as separate problems, requiring different solutions.*

To his credit, Peter Edelman understands the connections between poverty and inequality. Why, he asks, have we not achieved more as a result of the war on poverty?

Four reasons: An astonishing number of people work at low-wage jobs. Plus, many more households are headed now by a single parent, making it difficult for them to earn a living income from the jobs that are typically available. The near disappearance of cash assistance for low-income mothers and children — i.e., welfare — in much of the country plays a contributing role, too. And persistent issues of race and gender mean higher poverty among minorities and families headed by single mothers.

And so poverty continues to grow: in 2010, 16 percent of the U.S. population, or 49.1 million people, fell below the poverty line.**

We even know what to do:

make the rich pay their fair share of running the country, raise the minimum wage, provide health care and a decent safety net, and the like.

The fact is, growing inequality in the United States over the course of the past three decades has created a relative surplus population that just barely gets by on low wages (if working) and meager welfare benefits (for those who can’t work or can’t find a job). And the growing ranks of the poor have, in turn, served to keep wages low for everyone else, and to create more surplus for those at the very top.

In other words, poverty and inequality are connected because of class—the particular class ways the economic and social structures of the United States are organized. A tiny group at the top is allowed to appropriate and then decide how to spend the enormous surplus produced by the rest of the population. And the decisions they’ve made—in the economy and in the political realm—have meant more people falling below the poverty line (even when they work) and more inequality in the distribution of income and wealth (no matter how hard people at the bottom work).

I’m all in favor of what Edelman calls a “politics of honesty.” But that honesty has to start with understanding the class connections between poverty and inequality. That’s the only way we’re going to create an effective “politics of change.”

*Except, of course, in mainstream economics, where poverty and inequality are barely even identified as problems. This is even true today, in the midst of the Second Great Depression, when mainstream economists are obsessed with the issues of inflation and growth and rarely even mention growing poverty and inequality in the United States, much less the connection between them.

**That’s according to the new Supplemental Poverty Measure. The official numbers are 15.2 percent and 46.6 million, respectively.

These are data collected by Kieran Healy.

Despite their large differences, all of the U.S. regions have higher average rates of death from assault than any of the 24 OECD countries we looked at previously. The placid Northeast comes relatively close to the upper end of the most violent countries in our OECD group.

Here is Healy’s chart showing that assault deaths in the United States are much higher than those of other OECD countries:

And here is Healy’s chart showing that the South is more violent, by far, than all other regions (although Healy does point out that some Western and Midwestern states have higher assault death rates than some Southern states).


Yep, they’re still battling over the terms of the bank bailout—and rightly so.

The current battle is between Team Tim (Geithner) and Team Neil (Barofsky), the actual bailout of the banks versus the never-enacted bailout of homeowners, with Matt Yglesias stepping in to try to referee the dispute.

Team Tim would say that they’re trying to create a well-capitalized banking system in order to bolster the broader economy. Team Neil counters that the broader economy would be better served by a policy that imposed steep losses on banks and instead repaired household balance sheets. Beneath all the anger and accusations and counter-accusations is a fairly wonky policy disagreement about the relative importance of household balance sheets versus the credit channel to laying the preconditions for growth.

So who’s right? I think this is actually a much more difficult question than partisans on either side are willing to acknowledge. Team Tim has bolstered their argument with the overblown notion that homeowner bailouts “launched the Tea Party” via Rick Santelli and are therefore politically impossible and thus one doesn’t even really need to address the merits of the case. On the other hand, Team Neil has never really presented a coherent alternative course of action that takes real account of the consequences of imposing very large losses on the banks. From the original winter 2008-09 argument over bank nationalization along Swedish lines, I’ve rarely heard it acknowledged that these courses of actions would likely have required hundreds of billions of dollars in additional “bailout” money. I think that still would have been the optimal policy, but it’s not a no-brainer and I think the administration’s left-wing critics would have been very disappointed if the White House made universal health care take a back seat to a second round of bank equity injections.

What Matt fails to recognize is that the bailout of the homeowners could have been made a precondition for the bailout of the banks.

I actually agree that, in the fall of 2008, the banks needed to be bailed out. Otherwise, the entire world economy could have come tumbling down.* I do think we came that close. At the same time, Washington was in the position to require that the banks write down the mortgages they’d profited from during the preceding decade. And, if the banks wouldn’t agree to that condition, they could have been nationalized.

That’s the simple policy option neither administration followed. Not Bush (with Paulson, Bernanke, and Geithner), and not Obama (with Geithner, Bernanke, and Dudley).

And now we’re paying the consequences, in the midst of the Second Great Depression.

*Let them lie in the beds they made? Well, the problem was, the rest of us were under the beds and would have been crushed if they had collapsed.

Special mention

It’s the middle of the summer, and not yet the hottest month, but the heat and drought are already taking their toll.

The living and working are clearly not easy, according to Frank Bill, either in a warehouse in Louisville, Kentucky or on the farms of southern Indiana.

It’s July and the temperatures throughout southern Indiana and northern Kentucky are an inferno, in some cases scorching to over 100 degrees, and we know it’s not even August yet; it’s only going to get hotter. Several days in a row I get a mind-splitter headache; it’s so bad, it hurts to blink.

At my job, it’s the huff of chemical fumes and the smell of dirt from truck tires cranking up and down 13th Street and into the Southern Clay warehouse in Louisville, Ky. I sit on a forklift from 8 a.m. to 4:30 p.m., loading inner-city semis and overseas shipping containers with paint additives. Sweat coats my body like moist insulation.

In the evening, on the drive home, the heat beats down on the traffic. Crossing over the Sherman Minton Bridge to Indiana, I can see the Ohio River has receded, revealing stair-stepping stone formations below the former banks. On Interstate 64 West, cars and trucks are stalling, breaking down, not built for the high temperatures. Exit onto Crandall Lanesville Road, past shrunken feed corn crops. Windows down, a sticky breeze whirls in as I speed past corn and soybean crops into Harrison County. Past homes where yards are dead foliage and scabs of dirt.

Much of the discussion of the so-called Wal-Mart model focuses on the offshoring of low-wage manufacturing jobs, especially to China. What we tend to forget about is the onshoring of other jobs, especially those involved in transportation and distribution. Those jobs create surplus for the firms that run the warehouses for Wal-Mart and other big-box retailers, and are an important condition of their low prices.

Paul Harris describes the conditions in California’s Inland Empire:

While much recent attention has focused on abuses at the outsourced Chinese supply chains of companies like Apple, some experts believe Walmart’s US-based supply chain is built on a similar model, but one constructed within America US itself.

As is common in China, the supply chain is marked by layers upon layers of subcontracting. So, while every single box packed and unpacked at NFI Crossdock is destined for Walmart, the warehouse is owned, run and staffed by myriad other companies. The supply model has been dubbed “insourcing”, and experts say it is defined by ruthless cost-cutting as each layer of subcontracting seeks to eke out a profit margin.

“Walmart’s suppliers run out of places to squeeze out the costs, and they are left with the workers,” said Catherine Ruckelshaus, co-author of a recent report on the supply chain called Chain of Greed, that was produced by the National Employment Law Project.

Walmart is not the only big-box retailer supplied by the huge warehouses of the Inland Empire. Other major firms, such as K-Mart, Home Depot and Toyota, also work there. But Walmart sets the model for the others by its sheer size.

The impact of the immense pressure on Walmart suppliers can easily be seen at what workers call simply “the Crossdock”. Workers say they are given brutal quotas for the number of boxes that they need to shift each hour. Supervisors, they say, make it clear that any failure to meet those quotas – even at the risk of physical injury – could be the loss of a job. “I feel that I am just something they could use and throw away,” said Limber Herrera, 29, pictured, who is supporting a wife and two children on his wage.

The supply chain of Wal-Mart and other sellers of cheap goods in the United States involves the exploitation of workers in both offshore manufacturing and, lest we forget, onshore warehousing.

Where has all the surplus gone?

A large part of it is hidden in tax havens abroad. And, as Carl Gibson explains, wealthy individuals and large corporations have enough stashed overseas to pay off the national debt of many countries currently suffering under austerity measures.

Any politician who bemoans the national debt, whether they be American, Greek, Spanish or otherwise, is lying to you if they blame anyone but the richest 0.001% for the country’s massive debt. Because the richest 0.001% have anywhere between $21 trillion and $32 trillion stashed in overseas bank accounts simply to avoid paying their fair share of taxes. It’s a number that’s simply beyond comprehension. Even if someone had spent a million dollars a day since Jesus was born, they would have only spent $700 billion by today, just $0.7 trillion.

$32 trillion is a hell of a lot of money. In fact, it’s more than double the United States’ total accumulated debt. In fact, $32 trillion would be enough to settle both the debt of the United States and the European Union combined. Visualized in cash, the amount of money stashed overseas by the 0.001% would be almost as high as the Statue of Liberty and wider than two football fields. And thanks to the numerous loopholes, gimmicks and special deductions written into the tax code at the request of corporate lobbyists who have the ear of the chairmen of tax-writing committees worldwide, public debts and corporate profits are skyrocketing, while tax revenues and the standard of living for the other 99% of us is plummeting.

Instead of being taxed, that same class is more than happy to lend its money to governments—at interest, of course—and to call for the imposition of austerity measures to keep everyone else in line. So that it can get and keep even more of the surplus.

Special mention